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APRIL 19, 2010
TIMOTHY A. LUEHRMAN JAMES QUINN
Groupe Ariel S.A.: Parity Conditions and Cross-Border Valuation
On June 23, 2008, a Monday morning, Arnaud Martin arrived at his office in Groupe Ariel’s corporate headquarters in Mulhouse, France. The previous week, Martin had requested additional financial information about an investment proposal from Ariel-Mexico, a wholly owned subsidiary that operated a manufacturing facility and a regional sales office in Monterrey, Mexico. The information had arrived late Friday—too late for Martin to analyze—and was waiting for him Monday morning. As a financial analyst for a global manufacturer of printing and imaging equipment, Martin examined many cross-border projects, particularly
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Ariel’s low profitability was typical of the industry in 2008; all of its competitors were similarly affected by the recession. One bright spot in the company’s outlook, however, was its growth in several emerging markets, including the so-called BRIC economies of Brazil, Russia, India, and China. Ariel had been a global firm for years, but did not move aggressively into emerging markets until 2003–2004. This was later than some of its competitors. On one hand, this meant Ariel’s market share lagged in some markets. On the other hand, Ariel avoided some of its competitors’ earlier mistakes. The company’s international operations were conducted primarily through a large network of subsidiaries, which operated mostly medium-sized regional factories in which printers, copiers and other products were manufactured to suit local tastes. Ariel conducted business in 28 countries around the world, with operations consisting of manufacturing facilities, small research labs, as well as sales and marketing subsidiaries. In 2008, subsidiaries outside the European Union recorded about half of Ariel’s sales and generated slightly less than 40% of pretax income. Ariel competed in a relatively mature market, and its chief competitors were both established multinational companies—some of which had developed their consulting and other after-sales services businesses to a higher level than had Ariel—as well as smaller players
Reflecting on this course over this semester, there have been many lessons learned that will be valuable, as we enter the business world. Our first lesson was to learn to work together, as a team, to prepare a short memo, long memo, letter, and email for use in the business world. This is a lesson that will experience many times as we do our daily work. Punctuation and grammar are so important to present to the client and other organizations that we are professionals. It could mean the loss of a sale or acquiring new business. It’s like dressing for work; looking professional or unprofessional.
You are in your third year as an accountant with McCarver-Lynn Industries, a multidivisional company involved manufacturing, marketing, and sales of surgical prosthetic devices. After the fiscal year-end, you are working with the controller of the firm to prepare supplemental business segment disclosures. Yesterday you presented her with the following summary information:
Olaudah Equiano (Gustavus Vassa) was kidnapped from his African village at the age of eleven, shipped through the arduous "Middle Passage" of the Atlantic Ocean, seasoned in the West Indies and sold to a Virginia planter. He was later bought by a British naval Officer, Captain Pascal, as a present for his cousins in London. After ten years of enslavement throughout the North American continent, where he assisted his merchant slave master and worked as a seaman, Equiano bought his freedom. At the age of forty four he wrote and published his autobiography, The Interesting Narrative of the Life of Olaudah Equiano, Or Gustavus Vassa, The African. Written by Himself, which he registered at Stationer's Hall, London, in 1789. More than two
1. Compute the NPV of Ariel-Mexico's recycling equipment in pesos by discounting incremental peso cash flows at a peso discount rate. How this NPV should be translated into Euros? Assume expected future inflation for France is 3% per year.
firms had established international offices from which to deploy money. “Major U.S. LBO operations like “Carlyle, Blackstone, TPG, KKR, and Bain Capital – all had several overseas offices by 2005.” Empire felt the pressure to compete; “by 2005, the question was not whether a large private equity firm had an international operation but what international deals it was doing.
Please register as a student and use the following link to access the cases (only the questions for the first case are shown below):
This case discusses Cross-Border valuation of projects. This kind of analysis is common for companies that are operating in many countries. Groupe Ariel is one such company that is considering investing in a project in its own subsidiary in Mexico. The company manufactures and sells printers, copiers and other document production equipment in many countries. As far as, expansion into new markets is concerned, company is very slow in taking initiatives as compared to its competitors owing to the recent recession. But the management of the company believes that better durability and lower after-sales service costs of their products enable the company to build customer
Question 1 - Would you grant any of the special requests of the four expat candidates? Provide your rationale.
This passage from Act 3, Scene 3 depicts Ariel as a Harpy speaking to Alonso, Antonio, and Sebastian that messing with the divine is catastrophic. Shakespeare may have been foreshadowing the three’s downfall by using this passage. To begin, Ariel talks about fate many times, whether it may be stated or implied in his words. For example, the number “three” is used multiple times. “Three” is often associated with fate; in Greek mythology, there is a specific set of characters called the three fates, who work together to determine a human’s destiny by spinning thread. Furthermore, Greek mythology had a great influence on Shakespeare’s writing. Ariel first addresses Alonso, Antonio, and Sebastian as “three men of sin, whom Destiny, / That hath to instrument this lower world” (3.3.70). He says “you three” the second time in the next stanza, which once again, brings up fate, emphasizing the that their fate may have been “sin.” He then uses the word “Destiny,” a synonym to fate, and leads them into the “lower world,” or hell, symbolizing a destructive path
It has been said that worship is the core or center of mission. The ultimate goal of any missionary is to bring people (entire people groups) into a passionate, relationship with God. John Piper states,
What is groupthink? There is a simple definition for it, but is it truly that simple? The term groupthink refers to the inclination of group members to have the same opinions and beliefs; it frequently leads to mistakes. It often occurs without an individual being aware of it. Conflict is considered to be a harmful element when related to groups, but conflict is good when considering groupthink because it helps to eliminate the existence of a groupthink. The explanation sounds simple enough, but it is more complex than the description given.
An important part of our learning and growing experience must stem from our ability to analyze and reflect upon the groups that we have been members in. This reflection can define our understanding of the weaknesses both in ourselves and in the others within our group; and it can help to shape the way that we act in future groups. Adjusting ourselves to compensate for our weaknesses, based upon an honest and thorough examination of our actions within a group setting, is one of most important thing for any person to do. It is only through this evaluation that we can improve ourselves and our interactions with others. This paper will examine a group that was required to make an important decision about adding a new member
of the members were given and we were asked to finish a project on a
After completing the group task of preparing a presentation on, transferring individual facilitation skills into a group work setting I will critically reflect upon my own participation. I will evaluate my self-awareness while working in the group, as well as those around me. The way that I personally dealt with any issues that arose within the group and how that affected the group dynamics. I will also briefly discuss the roles in which each member of the group took and how role allocation affected, the group dynamics and the working relationships. Finally I will evaluate my work having discussed it with my fellow group members.
As people, when confronted with a problem where a solution must be found, our ideal situation is to come up with the best possible one. To do this, we ideally gather the most knowledgeable, intelligent individuals into a group and attempt to derive the best solution to the problem. With the collection of these people, one would think that finding the best possible answer to the problem would be a rather simple task. However, what has happened in many situations is the complete opposite. Rather than finding the best possible solutions, many ideal, cohesive groups arrive at the worst possible answer largely due to problems in communication within the group. This is what we call the radical theory of